What is a bought-deal financing?

In a bought deal, an investment bank (or syndicate) agrees to purchase a company's entire share or unit offering at a fixed price, then resells it to investors. The issuer gets certainty: the money is committed regardless of whether the bank places every share. In exchange, the offering is priced at a discount to the current market price, and the bank earns a commission and takes the placement risk.

Bought deals are common in mining finance because they let a company lock in capital quickly to fund drilling or development. The announcement usually moves the stock toward the deal price (new supply plus the discount), then trades on how well the placement is received.

For investors, watch the discount (deep discounts signal weak demand or urgency), the size relative to market cap (large deals are heavily dilutive), and whether warrants are attached. A bought deal differs from a "marketed" or "best-efforts" deal, where the bank only agrees to try to sell the offering.